The Death of the Annual Review
Often the bane of both employees and their managers, traditional performance review systems are facing extinction in corporate America. Traditionally, managers and employees agree to annual goals in the first quarter of the year and enter those goals into a performance management system. More than likely, no one looks at those goals or discusses their continued viability again until year-end when results against those goals are tied to an annual compensation process.
Managers and employees find the process tedious and often without direct applicability to the reality of the actual work - where goals and priorities shift constantly during the year. As an HR business partner, I went through 20 cycles of this type of performance management process. At best, it has been a ‘necessary evil’ to justify compensation and promotion decisions. No one, not even HR, likes the process.
Why is the traditional annual performance appraisal system flawed? Primarily because the focus of the review has been misplaced. Setting goals under the traditional system requires identifying one or more weaknesses that an employee has demonstrated. One primary goal of pointing out the employee’s weakness is to identify an area for further development in order to help “round out” the employee’s professional growth. And sometimes, in forced distribution performance management programs (the worst performance management programs ever devised), overall performance was determined by the severity of the weakness and the steps the employee took – or didn’t take – to overcome that perceived weakness.
So why change something that has ostensibly worked for decades? The truth is that this method of performance management is simply becoming irrelevant. Companies are more dynamic; with restructures, mergers, acquisitions and start-ups, goals change frequently and substantially during the course of a year. Online performance management systems simply weren’t built to withstand continual amendment. Also, the workforce has changed with the entry of so many Millennials who expect immediate and constant feedback, and an increase in responsibility more than once a year.
So what can employers do to ensure that performance is on track and meeting business objectives? Enter strengths-based coaching. In strengths-based coaching, there is no laser-like focus on the employee’s perceived weakness. Instead, the focus is on taking the individual’s strengths and leveraging those strengths to get better, faster, more accurate results. It’s a win-win situation. Employees get to do more of what they’re good at and managers see increased results. That has given rise to a new era in performance management: coaching for performance. Now managers must be prepared to be coaches and give feedback in the moment – and more frequently.
The coaching process itself consists of a series of one-on-one conversations. These can occur during informal work progress discussions, formal performance evaluations, and at appropriate times throughout the work day (“coachable moments”). The immediacy of coaching feedback is also a plus; if something isn’t going well, managers can realign the employees’ objectives, or offer training/mentoring to help them succeed.
With the consistent application of strengths-based coaching in the workplace, there would no longer be the need for an annual focus on an employee’s performance against individual objectives and team/company goals. The dreaded annual performance review can soon be a part of history.